Former IDEM employee’s unlawful termination case can continue

A former Indiana state employee can continue her case against the Indiana Department of Environmental Management after the Court of Appeals decided Thursday that her unlawful termination complaint stated a claim upon which relief can be granted and that sovereign immunity cannot apply.

Suzanne Esserman had been an employee of the Indiana Department of Environmental Management for 25 years when she was fired. During her employment, Esserman discovered that certain IDEM officials were misusing state funds.

Specifically, she alleged that applicants for funds from the Excess Liability Trust Fund, which pays for projects such as the remediation of contamination cause by leaking underground storage tanks, had not properly documented their claims and were, therefore, not reasonable and cost effective.

Esserman claims she was fired in retaliation for her reporting the alleged misuse of state funds, so she filed a complaint against the state agency in Marion Superior Court. IDEM moved to dismiss the claim, asserting that the state had not waived its right to sovereign immunity from retaliation claims under the False Claims Act, so Esserman’s complaint did not invoke the subject matter of the trial court. Further, IDEM argued that the facts alleged in Esserman’s complaint failed to state a claim upon which relief could be granted.

The trial court agreed and dismissed Esserman’s complaint, prompting her appeal in Suzanne E. Esserman v. Indiana Department of Environmental Management, 49A02-1605-PL-1129. The Indiana Court of Appeals disagreed with both of IDEM’s arguments and reversed the trial court’s decision Thursday.

First, Judge Edward Najam, writing for the unanimous panel, noted that the Indiana Supreme Court had previously defined “three limited circumstances in which common law sovereign immunity still exists: crime prevention, appointments to public office and judicial decision-making.” Esserman’s complaint does not invoke any of those three circumstances, Najam wrote, so IDEM is not entitled to common law sovereign immunity.

But IDEM had argued that in cases such as Skillman v. Ivy Tech Community College, 52 N.E.3d 11, 16 (Ind. Ct. App. 2016), the appellate court had stated “the general principle” that a “state may not be sued in its own courts unless it has waived its sovereign immunity by expressly consenting to such suit through a ‘clear declaration’ of that consent.’” But that case is different, Najam said, because it involves a suit against the state under federal law, which implicates the 11th Amendment, not Indiana common law.

In response to IDEM’s second argument, Najam wrote that Esserman’s complaint did state a claim upon which relief can be granted because she alleged that she was terminated in retaliation for her “numerous objections,” which is actionable under Indiana Code 5-11-5.5-8(a). Further, Najam wrote that Esserman did not state a qui tam action, so the False Claims Act’s limit to citizens’ ability to bring such an action on behalf of the state for the recovery of funds does not apply.

Thus, the appellate panel reversed the dismissal of Esserman’s complaint and remanded her case for further proceedings.